CAKE - Earnings call transcript Q4 2021 | The Cheesecake Factory Incorporated

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Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory Fourth Quarter Fiscal 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President conference. and Vice may Relations, begin your of Marcus, Investor Finance you Etienne

Etienne Marcus

Emma. afternoon, you, XXXX Thank Good earnings quarter our call. fiscal fourth and welcome to

Chief David On today our Executive Chief President; Overton, Executive and Clark, Officer; President Officer. our and the Matt David are Chairman Financial call Vice our Gordon, and

statements of Before we will remind facts discussed stated and Private are that Exchange quickly statements call are speak be forward-looking in XXXX. Reform statements on any a and press during and forward-looking Act historical our statements. is meaning this release, from in implied of or that Commission. be Actual made undertakes begin, with on you of let which within update considered as investors.thecheesecakefactory.com Litigation Securities the on results duty in our Securities the forward-looking All Company factors as those not the no materially me filings items this the based result forward-looking of and call, detailed different date today's today's available only at the website to could

and call operational that, financial call will a most described. With David David some I'll of briefly In impairment and financial measures update. Overton acquisition-related GAAP on a assets which this opening press basis, an lease comparable presenting to non-GAAP our today's reconciliations exclude uncertain an Overton. quarter tax as update. directly turn for our on the addition, fourth then reserve of will be as appear and in results with use adjusted Matt provide measures conference explanation the call, we results review terminations, amortization compensation our contingent during as Gordon consideration, and David expense, website, of over will provide release well to will begin An our positions. previously and remarks,

David Overton

all-time restaurants fiscal XXXX high total and our again, the fourth during sales brand dining relative take in well surge strength their Box at Factory the our operators the very improvements mark and and two sales and share. end quarter We COVID-XX in Cheesecake both new fourth staff Black reaching increased believe sequential solid results to despite the with quarter line to Comparable been cases casual the The of labor during ability revenues Etienne. And a efficiencies, market last Omicron X.X% another Once restaurants our food and the the quarter, surge. expectations, our hourly in had year. continue with which with confidence outperform coincided towards the you, manager quarter trend operating productivity have Thank KNAPP-TRACK would weeks in the the the for indices, to with quarter retention. reinforcing of of softer we but the of manage

quarter first started trends Our sales have strong.

In quarter gap industry prior casual XX Cheesecake through fact, versus we have the first sales Factory up to XX.X% comparable are XXXX year. dining The February the recent most since fiscal further quarter. increased our the

to further look our XXXX, pipeline accelerate we remains to robust growth. ahead Looking unit development as our

having However, while governmental chain, we effects in local working have that cognizant permitting all are and remain been jurisdiction the the supply environment the the we approvals on sites and timing current our of are of openings. pipeline, on

in to including Italias Flower as other as North seven now three restaurants, five five as fiscal FRC as XX such, Factory year many XX as As many Cheesecake to to many locations. XXXX, four open restaurants, Child expect restaurants as we including and new seven to

remain and best driving made believe growth manage while to long-term X% our We investments We of licensing sales volatile protect which across positioning to pricing put strategic we that we Factory continued the time. point, also in Cheesecake restaurants the total currently our to our that To expect cost ourselves menu a X.XX% process currently increase margins year-over-year growth in will internationally one over managing includes committed approximately our goals open through increase pressures that Cheesecake permanent Factory our at environment, achieve are We menu, unit new under have four-wall price to to of and brands. structural both agreement. X.XX%. rolling out menu comparable

ever monitor next brands, of continue sales level environment, I'll operating are call We comparable volatile take determine needed with menu turn the as our Gordon. rollout. this to confident across will now well what share. best-in-class place our we continue to will solid David I and manage through that, the operators continue market during will to be over as trends to to our inflationary and that pricing positioned our remain effectively in to development pipeline With environment

David Gordon

David. you, Thank

environment. drove levels retention hourly longer-term To in We particularly hospitality of on in industry-leading to manager rates, year-end retention to staff, XXXX operating the where relative and goal comparable the growing end, continue to commitment staffing as the we focused that our be high-quality excellent fourth believe service we staff increases Cheesecake to to this both quarter. our training, selection, contributing and to quarter, this sales, to of foundational through be Factory and began staffing the challenging achieving our compared and during improvement to sequential the

metrics. increase guest Correlated trend. in Following QX January, by X% the XX% staffing to improved compared with sequential staff we end XX% we just Combined to already our hiring in improvement from the in our saw increased have that, XXXX. hourly of to in drove total retention we staffing, a satisfaction our rates, improvements

Scores Factory fourth remain accounting The Cheesecake all fourth with close solid channel to to service the quality. dine-in food hospitality trend channel off-premise of] and XXXX staff annual for quarter levels. sales Importantly, [pace twice for continued Promoter The Net total of weekly sales and improved, quarter experience, sales. trend average this can XX% our including annualized

raise The back Cheesecake marketing our Factory The the we primarily platforms. technology shared shifted As while of our continuing Cheesecake to I of previously, brand, enhance our and for have restaurants, the strength profile messaging Factory and to brand-based upgrade with performance, marketing sales to

with website the delivers online average refreshed more driving goal better forward, order values two the a of and Moving for we higher a platform along look, with ago just weeks our rates conversion guest forward commerce ordering. experience contemporary this launched more effort

also are our middle pilot e-mail year. more the We launch system rewards to the work migrated database planning to for the a we with to the in robust of hand-in-hand which CRM program, now

with Italia. Fourth sales sales comparable XX into up North. of Now trend comprising at XX% approximately the grew a comparable versus robust through XXXX. performance levels drove turning versus XX% strong FRC topline quarter. carried sales North February to with approximately quarter-to-date has That XX% quarter similarly fourth XXXX during off-premise XXXX

their wave I'll experiences constant financial continuing call We and continued for over of efforts With continue lastly, navigating ability brands turn now contribute over a unit our months, for to passion in growth. XX guests. And in through consumer to portfolio to of our developing the be while like confident and delicious to and and I'd teams to that, past review. their Matt headwinds thank our business our the memorable in to the our all deliver for

Matthew Clark

Thank you, David.

relative casual surge. to his the opening end with the the which dining in to sales quarter, of David remarks, deceleration XXXX broader alluded Omicron in As industry, the towards along coincided experienced a Overton we, with

December XX.X% full into going at to comparable quarter compared the Cheesecake sales of fiscal at were to results of Factory running fourth relative week X.X%. The quarter third Specifically, XXXX the

estimate with the gas to we costs bonuses expenses, management to from restaurant We incurred the share and of be $X.X slower impacts with about incremental $X.XX into sick addition, natural quarterly COVID-XX approximately I the coupled $X.XX the of quarter. paying last earnings higher during In year, of for million factored our per outlined, these sales versus none the weeks outlook prior time, to the related costs for quarter. XXX% initial of just two incremental of the impact trend

Importantly, many into inflation largely of the to navigate as our to business and head our key ongoing the indicators business came ability with we expectations, appropriately XXXX. for quarter aggregate line wage speaking environment our in commodities,

at up week Fourth Revenue and totaled in quarter external million specific sales Now increased were from comparable XXXX versus XXXX Italia Sales quarter operating The year-over-year sales total the per to $XX.X sales Cheesecake Flower period. $XXX.X X.X%. sales, XX% of including FRC, Child, Including were relative XX% at up North the to Factory year-over-year Italia bakery comparable XXXX. around $XXX.X quarter. and fourth And $XXX,XXX. and during FRC period, revenues comp increased North restaurants approximately million. were were million some details XX.X% contribution the fiscal

Moving to expenses.

period. XX XXX cost incremental sales associated some and points, training of as XXX due declined the costs Pre-opening the points, restaurants recorded going million controls. sales slightly from points this usual, COVID in basis over to locations. abnormal translated rates in prior our well we quarter provide variances. three Labor charge had leverage basis expectations, This quarter were outlined greater a higher As and million last item. year year-over-year sales note increased of the prior basis G&A impact costs. to given compared million expenses as inflation basis five to of operating by with about this year to total primarily points, the period, related as percentage the fourth sales Note than basis in declined leverage XXX line in the non-cash the we relative course, driven primarily to wage costs fourth sales Other of partially tight $XX.X to prior pricing. a impairment due Cost points, I margins. items $X.X detail. drove opened XX four by primarily commodity to leverage restaurant year in period. versus impact year that the of $X.X reflecting earlier declined versus also disparity primarily the higher during menu in primarily offset $X.X fourth in I'm But to revenues, year year-over-year quarter by significant that the a quarter, million In

as expense also and in was a share uncertain common We well net positions. million income was $X.XX. for adjusted Fourth net per $X.X acquisition-related $X.XX tax $X.X quarter income diluted per reserve recorded million share as GAAP

turning of the operating generated activities sheet. Now fourth The cash approximately balance flow to company quarter. during million and flow cash our $XX from

activities enabled development. unit tax flow XXXX million approximately payroll $XXX million CapEx approximately available revolving totaled the year balance with $XXX quarter the operating related of for notes liquidity on nearly was the in due and total repayment X.XXX% generated million million $XX senior million debt end at the fourth $XXX This company million, including cash including our million, available from us our convertible $XXX year. Act, $XXX and cash performance and revolving a to facility. to credit the year Excluding of for in credit $XX of the the $XXX the outstanding maintenance million end new drawn of required facility. and $XXX Total million on CARES during

the will underlying of we nuances. sales not guidance, including thoughts that to we be dynamic, While on earnings very comparable providing operating be continues environment want the and our to specific XXXX, provide some timing for expectations some given

reiterating begin costs additional mentioned by to remain protecting four-wall Let actions, Overton will appropriate what menu and margins permanent pricing longer-term and to me including David We as our needed. take earlier. committed structural offset

we However, driven likely noted, to fluctuations absorb will have current short-term environment. as the by previously continue cost we

reaching with of assuming First, virus that $X.X have with be Cheesecake for billion revenues we the billion, respect $XX surges, impact no we the week AUVs Based this and to $X.X total trends on current could operating includes from anticipate impacts year. this Factory approximately further sales. million. year Note material XXrd the would over to extrapolating

low-double fiscal of inflation we Next, expect on year now digits annual commodity for basis. an XXXX,

lot we On for cost of pressure and pricing other absolute pressure pressure wage anticipate extra pressure year of as year-over-year G&A lessen modeling fourth for commodities we of X% with fourth we which to per operating factoring basis, sales first quarter. stable of XXXX. we Specifically, the currently starting when ending of expected inflation, ramp is mid-teens labor. modeling the the could has between sales continues as as about with total the with week to we the for high over the fairly increases, unit this are the the channel dynamic Other $XX inflationary commodities year quarter market the first are through of the of the be up go The year. quarter, different in also two mid mix modeling less quarters about are be corresponding in year expenses, year, reminder, end to net to moving with points through in points. in minimum single-digit a time, the $XX an to wage well XX.X% inflation in with as start parts. primarily by labor known would to Inclusive driven labor to We which labor approximately variability at in includes price components total a than and anticipate the quarters we quarter around those an rates, to million by be roughly middle with XX% the million and benefit comparison

assuming of are pre-opening $XX development approximately the the year. support We year for about three-fourth the occurring back of with million our expense plans half the to of in

expect for purposes. depreciation we for the of approximately tax in rate are using we about XX% $XX and Finally, million a full-year, modeling

with the parts, provide Given I quarter. will little these more also help detail bit the complexity of to first involved a with moving all

the full-year would no material and of our disruptions, revenue. to be current QX for anticipate we First, trends and the extrapolate $XXX million million similar quarter, the take to assuming sales we between $XXX if in balance approach a total further

of mentioned, for is margins. this Next, a range enterprise-level out had four-wall year-over-year This as pricing menu are will which a currently taking level consistent of increase. objectives pricing menu David supporting sales X.XX% growing with we the of and change profit with both price X.XX% and and comparable rolling anticipated total give we our us menu increase,

On the quarter XX% the on of it incremental for in the pricing, just X%. the under QX an full of timing is effective rollout, approximately rate weighted based first

percentage year. of commodities our margin levels the would increase be and operating assumptions, to in regain actions the price our incremental would and are well taking take the close leverage the Keep were towards has be points we to average norm. at menu to enterprise the of our that in to margin inflation that sales inflation quarter quarter the lower pre-opening. in we to we QX closer in than we our trends we first trend in around the G&A, need that due increased follow still also lowest margins leverage four-wall trends, to we of pricing our If the quarter, given increase current overall as believe would historically would first With third and as sales annual anticipate X which remain note expect expect higher below quarter the anticipate timing historical depreciation line much XXXX XXXX scale Also quarter another previously noted to the as this price XXXX. may our as than is primarily than margins We leverage, difference first four-wall their menu with by to back year our and mind by and prior four-wall an half X% assumptions, to the of XXXX. middle the

XX million year, with some of new plan while long-term recapture. the With would of degree to second the lens as respect open in However, in to remain this we most CapEx XX we level to a many anticipate believe potential for to to We it to margin is in support well prudent approximately development, volatility flexible as regard maintenance the year. as unit restaurants market of development given the required of the maintaining them restaurants. and our commodities reset, half on $XXX this our as

have for. Board we and to enable to distributions our environment, with consumer our ongoing maintained business the supporting The company certificate closing, shareholders anticipate is in capital that resilient that area. evaluating and hallmark XX-K quarters credit of this of a and Directors remarkably the our associated consistency filing remain be important challenges With a brands. our helped is in operational also has to actively our in the ongoing note despite it Factory related revolving Cheesecake in operators This of known In resume agreement, for compliance demand future the best-in-class will that is strategies to the position our

recover While can per in XXXX, margins of market importantly, industry long-term profit a combined and earnings the our gains. unprecedented, brands strategic scale share believe deliver plan current protecting our to inflation enable with business, we solid our share help while in pricing is

growth we are that growth breadth achieving said, With high-quality closer the to vehicles, step your take objective. With our our of unit also one believe X% questions. we we'll

Operator

from [Operator Sharon Instructions] of Your first Zackfia question today line with the comes Blair. William

Your line is now open.

Sharon Zackfia

relatively just comparisons mean as second seeing really we if to then kind good just that defend of year at Hi, – and need unit secondarily, inflationary on I price a if to elasticity as I year-ago you've quarter. in comment could just make half you taken of struck the want sounded as the And speak? the dynamic. you of that on in correctly. commodity you're with clarify that looking understood are increases when inflation the the actually comment your by guess sure afternoon. are you're couple third to increases questions and four-wall margins the willing the year? past cost you the reflection that demand the it price the incremental of I cost if want you're in was I seen around of side how the I to unit Does over year-over-year was stabilization stable. And your projecting that a you've

Matthew Clark

the Matt. Sharon, Sure. this And pertinent I probably questions those get. most is think we'll are

So thank off you leading for with that.

the say we pretty the would booked I with are around commodities regards be environment, where thing to year, XX%. inflationary XX% be, close around we'd to which somewhere first for right? Normally, is to normally we is The XX% would

headed. are so better to couple the than months did of have much visibility a we markets And where and we ago

that companies, have plan, to hope, we But a stable are have there you've few which not business but hope quicker. time. and lot heard it may as it would might come be relatively projecting there been of some help were things with down some is that a we things probably think over I a

It's accepting booking to that's where good at. locking that in some take and to we been to the risk being of that. your that. secondarily then So basically we're certainly the about willing there's it, and feel right protect And inflation, but some point, pricing

about into we where the crystal guests I mid-teens much digits. contemplated while sense going for a competitive even first pricing lot get make closer improvements we is first for then year, that think just lot second quarter we digits get don't have through ever quarter, would that the the the That's a you single forward, enough taking this inflation to perfect sense for the quarter our double versus ball, the to it's but Once quarter to quarter-to-quarter. with through and as with progressive quarter, it's the If make think doesn't a fourth pricing as progress through not retaining closer margins. more we really, look as combined getting XXXX in

Sharon Zackfia

then price Great. have any And you the far as consumer as bulk increases? seen

Matthew Clark

us that slightly and manage both ability for targeting, the pricing the the supply from years lot of to not has to never Historically, here ability different the $X.XX below XX and menu, very benefit our pricing pricing a strong. I and guests Cheesecake $XX ability through And seen anything going we're The in share execute after. to think been to of for set. take varied cycles ability have effectively, our to to competitive grocery get our frankly, we're chain's

coming going of out anything, we than to we're good specific year in relative our to this about to in So most past and a space. position be And companies consumers question. feel your if the better

Sharon Zackfia

you. Thank Okay.

Operator

line the Brian next Deutsche comes Your Bank. from Mullan of with question

open. Your now line is

Brian Mullan

thank Hey, you.

quarter Factory quarter in business from Cheesecake down third deal or sales per question to fourth Omicron. you on dine-in mid-single sequentially the brand sequentially Just was basis, a recovery the week had the and improvement core the about digits with that at

the what degree were volumes a So back or in normal your they that a to perhaps way specifically exceed? even as you of dine-in think for period, XX-month about operating environment come you can those optimism all discuss

Matthew Clark

specific mean Cheesecake over it I looking we're XXXX. running out the million Factory Matt XX trends is at $XX so. remarks, math, if just versus the AUV XX.X to Factory extrapolate quarter, or prepared again. This comps sales Cheesecake through the you at current fourth a weeks for Sure. our Per year, the simple gets

of thing I again think that we've that multiple the little every actually good stating the The we regrown demand feel is trends. stronger just made the seen remaining pent-up I comes the of The only pandemic build. time about us sales back The what bit off-premise execution business and stable. the And time by to through and time think brand better that with a of the continues stages before. competition obviously that is kind to our dine-in has the resilient. relative has more than teams

level that, business. to the support dine-in lost we So over haven't but recapture of we continue time that to

Brian Mullan

Okay. Thank you.

Operator

question David comes the next with Your from Baird. Tarantino of line

now is line Your open.

David Tarantino

revenue Hi, your exactly current Matt, could my weeks? a mean piece of wondering I in you're you're how together good is if guess trends? you have commented. Or you then do is was trends? quarter-to-date most you that afternoon. that outlook by the the first that. maybe question related follow-ups building to that couple may And extrapolating what Is I something seeing And I recent

Matthew Clark

Yes.

it's last four more the I think – looking be three weeks. to fair We're to Matt. David, at

sort that in gotten to basis, extrapolating makes But and current what that of we as in look week that's situation. first trends. we effectively if still were sense seasonalize Hopefully, dollar this a or performance mean Omicron on holiday to the where two by you. sales we've quarter, The at we

David Tarantino

us Factory sense Yes. relevant, embedded of be would estimate? comp would if I what you in the some guess, Cheesecake level potentially told a imply would for North for if that's us then that even Understood. that from you could perspective And and comps help it if but give maybe Italia what for

Matthew Clark

I has the with giving sort we're XXXX, space which talk noise, trying to sort to which people at help the we're comp by first – would early whether that to giving become downs figure mean, what the in quarter some virus. out I muddy you're funny if that I'm number of think the the Well, the trying on not still $XX referring the comparisons XXXX, we're the ups say little it's because a XXXX, to all a want million. a bit we're because comp and of with of specifically it's of to be, what ago now think years and really or guidance AUV moving still about, is total in I three number

David Tarantino

could it. to one, the I assuming But suggest you'd if is of it levels, see our quarters. you Got the to two, that just looking And I Omicron confirm, would could you're relative there? QX you guess, is pretty if Or that? a maybe off meaningful something pre-pandemic math see from And in or need mainly guess, rest to impacts? coming the else confirm step-up you

Matthew Clark

we thinking the would to right? at We least last X XXXX. assume relative so fully X mean, I generally we downturn and lap X, that after pricing QX would in Yes. year, capture Qs

David Tarantino

it. Got

for you Thank that. Okay.

Matthew Clark

welcome. You're

Operator

line Oppenheimer. the Bittner from Brian with comes question of next Your

open. now is line Your

Brian Bittner

you. Thank afternoon guys. Good

line outlook stand as upcoming So commodity factor. And in a than is little gets seems you're remain your to for outlook originally taking guess a higher we labor to here X.XX% increase I this price XXXX. price you your and that today, expected

if later things increase get price margin cost the to take bit to guess pieces Is in add assuming that saying you the correct, a achieve the these comments? little And need that in we you take your year? X% being operating XXXX is how of to I worse, outlook XXXX? able kind your So all that are levels should up

Matthew Clark

No, Brian.

sure we let's walk yes, through So This make is that. just Matt.

that sure make to Just gets that math. everybody

The first part, correct. you're

year had outlook last we call. I are, don't when commodities call current X% our for to the know, X% So our in it, than the higher

compensate those appropriate – to that second probably right? And at in the stay elevated first through enabled the in XX% to the so fully the attempting more would to about level, have really in recapturing for like X.X%, take in not the the that and commodities take summer So around. us to need recoup of we're quarter X% – need be about to we're We'd our that don't take inflation, offset timing summer say, the do quarter also we let's margins. if we quarter we XXXX just clear, those. with But at that, lap pricing order for it, it's really because to to commodity feel fourth the talking XX% nor normally,

before back we'd it's and pricing if only percent just lapping be then couple a commodities Now decline, were we over. come to our where

of that that's looking that toggle the sort at. So we're Does make sense?

Brian Bittner

And line think you year, achieving does. the committed point? It guess, I to is remain bottom operating I the this margins XXXX is those

Matthew Clark

on That's competitive for little XXX% a just well where for we timing. than want over months, that a lot that it in. X.XX% six So alone, it effectively six the of some that of we a basis. clarity is actually month the time, the we'll a at rolled we maintaining able in movement the good bit quarter to uncertainty get balance for just price be the feel this again, be will in goal a And and We'd right? where we to I year. our But more make given next be. more and reiterate, try in this course to wouldn't about level did sense first roll it commodities, as to as just we'll lesser

we So to very like feel to the X% get viable. is ability

Brian Bittner

Great. question. a just up just following And a quick model

about this of about You net X% labor year. talked inflation

Or how there about costs? that want inflation? the us kind variances our that of as want flow models translating actual to imagine X% or into is same-store costs labor Do do differences through? some you you So how are to we in model think going to

Matthew Clark

necessarily of brands So our and we're approach operating the model dollar of of fans percentage Brian, thinking some helping in people a things, the because two about components, as not Well, it we're differences sales. right? of the

on speaking, neutral percentage to have we where X% roughly those roughly in sales. So pricing, a quarters you're close of

and go commentary, you make However, don't me. other of quarters sure back got look the to at you've I which in front have

for this Sometimes right, the pretty quarter, would third year. there particularly not outlook included like which group high our think with anomalies, be I were medical, in in

so And will you. to lead of those kinds pieces

Brian Bittner

Great. Thanks, Matt.

Operator

the Your comes Jeffrey next from of question Barclays. with Bernstein line

now open. is line Your

Jeffrey Bernstein

talk Great. in questions. just slowing Thank wondering heavily in there can penetrated concerns traffic. guys pandemic, through are much. Two Obviously, I'm very higher if were One, you about mall you picture the traffic you typically general. around It malls. seems like bigger end

Now a a traffic resurgence maybe we're about hearing from things perspective.

mall follow-up? I could broadly share just hoping terms from then the versus Dave, I in had your you three years the the health today one thoughts So of was And maybe ago platform speaking? two, of positioning

David Gordon

Jeff. to and Sure, on at that time were and – pandemic destination This out the we the that the by continues the attributed for a that in great And Factory malls, proved felt David traffic were purely destination. can the to earlier we point destination early build is that Cheesecake on the I Gordon. during pressures To be a a as coming in come of back about off that traffic that only pandemic. is continues we to mall, your we think early sales saw

in that's had building lesser maybe a So softer it'll share that would and execution we job restaurants pre-pandemic, all We've anticipate done to during of part take saw lunch on-premise little good the around places awareness talked off-premise because bit comes the where hopefully back, the happened as traffic. about some a that daypart of market being in be And lunchtime. continue and we'll we traffic we time. a of

be sites We a that for forward. with and whether or at looking continue good move feel only, positioning. about good feel mall. a our mall of historical strategy We'll outside about that So we a

Jeffrey Bernstein

And then Understood. a just follow-up.

said first paid mentioned, is the you to shareholders I capital think, to once, discuss Board you off is the I this of return keen revolver quarter. in think

assuming about seen? share versus maybe early what be cons. is process any just the terms in the guess, point, repurchase I'm thoughts presumably, that share Or any offered? you're to pros and thought in I talking of that I'm still dividend. And wondering, But the we're is at So remain guidance of not repurchase you assuming XXXX this kind there.

Matthew Clark

Good Matt. question. It’s Jeff. Hey,

I everything think is table. the on

the will of of the on we have still but clarify, do restrictions XXX to covenants, Just the revolver. sort the we exit pandemic

movement the with up. rates So even are that Obviously, is option, interest an of low, too. the some

that also at first to be fair, repurchase, right. dividend supportive of the around think but has focus I least, reinstatement, the they're anti-dilutive Board's been

it. compensation We that that to make just we're able plan begin to be have an of to equity offsetting and piece sure

I year. quarters this think table both some future of of are those in for the form on

Jeffrey Bernstein

Understood.

pursued So strategy have you guys similar holding return? prior that the to to

Matthew Clark

so, the more think repurchase revolver maybe lighter a just our particularly avenue will particularly increased, down there growth the beginning, another in to component, with bit little I given that on also have be CapEx. that we and has the pay

anti-dilution. point, first, followed maybe So an I share support dividend some from think just it's repo as emphasis by

Jeffrey Bernstein

you. Thank Great.

Operator

from Your Morgan of next John line the Glass with question Stanley. comes

line open. is Your

John Glass

very Thanks much.

XXXX, stimulus role Matt, you a played as First, about think in XXXX.

Do you assume if experienced average I think XXXX. quarter during don't do during you last of you you data, I said there $XX is was the sales you weekly a as think second XX growth what are AUVs year that's, and growth demand would at or stimulus think, and how benefit? of you it that that you AUV you got Or do played revenue XXXX? third there par weeks, the think look think and risk over million about on Or role with repeat? back last about think a you year how in the that excess

Matthew Clark

John. Sure,

honest, week. I don't of $XX at probably XXXX. be million, level we'll the same think over excluding the will AUVs and that's to be that We be extra anticipate

saw we're The look wave you we was of we year thing We off-premise throughout of surge. cadence the that much up and of difference confidence last think the saw lap to remarkably consistent that anticipate now, we stepped that on will to are the us. different made even comping the if that absent we're piece a the full least really built reopening. we in as comps just lose noting of you be just don't And comp soon don't think going time, at our right? periods a the level, as stimulus reopening, true, I recaptured the biggest reopenings, so up then Omicron that at of and the at it. once and We're the we've that, pricing

going think AWS for build positive I Factory we're brands. The that our and all So of see Cheesecake to really on for

John Glass

margins about recently benefit. up do you maturation the will, you've sequentially North margins just opened segment in XXXX about you're getting if those versus sort mature? up, Could you think though core business? dynamic Thank positive, stores operating you. Cheesecake Italia more margins end that pressure. the do of their being about How you How improved the that a as start at that? to If Is think some under actually even I were stores the follow of

Matthew Clark

gotten it. in a David was team of and could they David summer out would challenges they a first of coming greater. and of because the were North where it focus for staffing the focus brand. I and had The to smaller say, all, point stabilize big kind a It's Well,

XXXX. momentum lot So put work a the of into building into going team

And standpoint, noted, you those supply also then were quarter a I beginning pandemic, mean, John. a think, above I are would would fourth I show So they frankly, to chain the not of some north, stood the we more the mean, sales. for did be margins. we be support strength the supply everybody I if think well. have right? it integrated team starting it able And maturation thought from Our really, leveraged to of we some from that's and just work as work. to the chain,

done the in So we're cautiously it's headed there, be There's but optimistic. direction. work right to clearly

John Glass

you. Got it. Thank

Operator

from UBS. Your Geiger next question comes the of line with Dennis

line Your now open. is

Dennis Geiger

building if wondering tailwind like? what of year. that on maybe you. any to that, then how you and feel gains represents and hours the from from through commentary more the impacts more if maybe needed, question. recent that is looks staffing just talk, about just I'm situation months. for needed. presumably, wondering a XQ a bit then curious And sales, is you in Thank I'm operating and the from as the the staffing impacted much could staffing Thanks on that made for here staffing how here And in kind impact the you you've the thanks though, from move more

David Gordon

and we pretty those closed some any is David here now saw we're we back to particular now prepared we're I early in any a talked And particular comments. out day close of uptick staffing point Certainly, day, the about really of certainly beginning or seeing for that the This but to out systemic. Gordon. the make coming hours Dennis. with probably is here were nothing trend, part, Thanks, relevant pressures the I that there restaurants. positive adjustments few few that that to weeks way larger the the all in in increase in what continue next to from that QX had pandemic. than or to was the had think an maybe I the mentioned continued a XX% in XX% the And where that staffing average. Not was January, We and the months in if that that hiring or restaurant opened our surge to

be this So we'd any place. that in continue, certainly, potential were And to no sales a in way point. strong needs if any staffing are of our sitting prohibiting really at

off-premise. dine-in execution, I good that's for think a whether staffing being about and we for feel position restaurants strong or in the solid really enabling really

Dennis Geiger

And then just helpful. That's one more.

sort think, each sounds of particularly you Matt, the to after you've I that spoke encouraging. seen wave recovery

Thank or you to to reopening in customer over particularly about of we weeks that's recent restrictions would Anything Just been wave more call behaviors, just that recovery on seen anything wondering that out the with you. easing. hadn't the else interesting, impacts parts think previous sort as day share this latest you waves? maybe

Matthew Clark

interesting some mandates think would that And pretty we and question. have in for advice lifting case And recently the mask home that of holidays quarantined. is there fast. more guest Yes, to see jurisdiction, sure, about as the public we I Dennis. correlation It's over fast declines, the with like, them positively Matt. I they really come people the say It's traffic. announcements seen people medical and that sales an the and lifting speaking heating got they or the about and back were sick stayed soon as a

we to trajectory kind despite don't of we recapture It's off-premise the the keep sticky And saying. off-premise. also on-premise continues we're dining We think that. I I mean noteworthy and know. what feel so very can that's our that is like the very positive. be

positive really is So think we're I seeing of which a happen, both outlook. that

Dennis Geiger

Great. Thanks guys.

Operator

comes from the Your John next of Ivankoe with question line JPMorgan.

Your now line open. is

John Ivankoe

when go or Hi, and at much other you out about your words, came impactful actually the how itself, like you back versus that to they do malls you customers close. think were I even do effective closures relevant thank the Factory, your Cheesecake Factory, at you relevant in think market? when you. think Cheesecake you one point, maybe how before thought we guess, maybe actually you to supply do your In and trade I had areas was? look XXXX of XXXX, guess actually that

Matthew Clark

reopening that moved. John, quickly. can is I they're mean say I Matt. what don't is this know it’s I not that that

for open talked the opportunity back this. you midsized getting There's think the still. game small we or into So them and to no continues any the see or like many commodities share market of for to urgency labor opportunity, when I frankly, and XXXX operator

next us to closed years So the that restaurants two still ago are closed.

closed, opportunity. to dynamic is So more it we've more not capacity, back coming out people because and the not restaurant the because people there's I eat that sales go built than bears was The to just momentum want it's that but that think continues that quickly.

John Ivankoe

permitting and Understood. equipment would... Yes. number and obviously, any delays things of delays And

Matthew Clark

new Exactly. I mean just all restaurant. of try them a to build

the capabilities don't you to have Factory Cheesecake scale the and that luck The well, you. good If has,

John Ivankoe

that contribute XXXX? potentially a in can from number restaurants Is a maybe wide? about across versus I perspective, there the I performance future? that, grouping performance maybe time. comps How XXXX very Yes. there little it to talk over Understood. time it this is we tight look we that mean can still chain? are your are a a near is restaurants current down of could certain disparate still sales pulling the related that the of And mean, actually we bit you talk and any in about period as want,

Matthew Clark

of looked back The the get Yes, to still in thing just travel in suburban right. the people is that and they biggest returned And performance I some breakeven across while rest urban which – we but the there's very to doing and fourth of were doing the part. we that’s I may But opportunity X% would have last downtown to be but be see imagining continue areas it it doing earlier, those they I'm similar, that when X% So pretty because question I it, The I mean the malls. we to million country. $XX be do to a at – are depressed, broad-based strong $XX exact say haven't before, location right? looked think, have math. a it quarter, volumes, decent pretty see, the was for may to negative. million, might that's

If are back single biggest areas So and urban hotels starting there. hearing opportunity people the the thing is tourist really to half. that could in out the what us I we're and flights think book again, help

John Ivankoe

Thank you.

Operator

comes question next Silberman with Credit Suisse. of from Your line the Lauren

open. is now line Your

Lauren Silberman

you. Thank

I just to recent to that trends pre-Omicron compare weeks, in those seeing want First, how you're the trends underlying clarify do levels?

Matthew Clark

its Matt. Lauren,

period. to back We were we where have much the pre-Omicron right gotten pretty in latest

Lauren Silberman

any the see more really below to price, as consumer more the we're start being said, Do if elasticity price price to now consumer pricing, across on And rate. not we you. taking which growth prudent. at entire Thank landscape? across what menu see appreciate you you risk Great. X.XX% Definitely the industry seeing

Matthew Clark

take years, whatever pricing I We've we twice said, think three point. at it our that or is flexible. to four where done a for it is positioning be I enables this us Like year.

about it. all. always got the doesn't XX be We've place effective And talking We'll difference in capturing been smart concern menu we at the we've about points, we're where Now it. is variation. basis us

X% just more. leaves So a about bit X% need seeing we're like to talking gap. longer. It's We're or T a we little not big about take talking the not

Lauren Silberman

versus pretty off-premise Do you the then expect just seems about talked And nearly you're as off-premise components. thinking on How steady you versus here? about off-premise, are on-premise continued few off-premise opportunities you quarters. outperforming thinking pre-COVID. capture those It the it. on-premise, just to over you from last versus for growth Xx on-premise how of growth Got about continue

David Gordon

sticky as Gordon. and of remain. pandemic that this our into we've Certainly, growth is expectation built said that beginning the to feel Lauren, the for off-premise for this the is that is we plan since David the year that we

restaurants looking We that, to can currently outsize need to be the to the are do we do We'd back in continues to think be inside to capacity not happy to we as to the off-premise. with and continue will as that to we're well. high-XXs continue currently to So today. we where mid-XXs necessarily continue grow

So the we today, we're stand and that's where year. anticipating throughout the of remainder

Lauren Silberman

Thank you, guys.

Operator

from question Raymond of comes Brian the James. line Vaccaro next Your with

open. now is line Your

Brian Vaccaro

If evening. Good math I X.X%, my just sure make I to various close hit. that Thanks. quarter-to-date is I take guess It before COVID times. XXXX X% disclosed you've up two-year on seems just Is loop at like right. to early your period the quarter-to-date. on one-year wanted comps that versus Cheesecake right? is the in that

Matthew Clark

that don't me. front of call can in XXXX back on have you we honestly, I year with up Brian, one.

Brian Vaccaro

back versus you're trend. say a just to trend, a pre-Omicron that's did you But sure and pre-COVID make wanted to Okay. I

you're XX% to versus pre-COVID close you're somewhere that trend? So suggesting a

Matthew Clark

you've variations at think the the weather, to about the we you've got Bowl, are in comp brings holidays, different pre-Omicron opinion, cetera. moving best you've my best the et the – to got given way, back I of the Because way all years, over Super Where got right? AUV trend. today think us

were we But et same to running have seasonalize adjusted, would get cetera. AUV always the basically it that to you So us back levels pre-Omicron.

Brian Vaccaro

X%. call to differential of numbers. differences. at up temporary down, of us there's Cheesecake Factory, in specifically? segment pressures margins structural quarter, or path towards the think I and XXXX, is versus I recovering the with historical But help between segment bridge And the you versus at Cheesecake us lot onetime help that could noise a just at the margins Okay. just the know And XXX ask still it, AUV looking bps about I want fourth the quarter

Matthew Clark

Sure.

flow-through that be So I impact from I would was all, the that would weeks of X.X% say, the last obviously, two material. say could delta. and the pretty first there of

Remember, said the be pricing. about level is big commodity X% X% piece versus we inflation we'd pricing. to at relative a second The

XX about talking basis So another you're points right there.

X.XX. probably that's So

basis that I comes other to we really, would bonus noted the XX say, and – XX basis around The down pay COVID was points. manager difference

Omicron hopefully, talking to gets some ballpark. compared timing about you're impact, and that the and So onetime of to inflation pricing the costs. And back kind the then in commodity you

Brian Vaccaro

correct ask specific It last fourth could natural And that but into Okay. if the us I to that line about pressure I in caught if higher But correctly? the cost those wrong sort points number the that. gas heard operating then you lower. That's on it just helpful. be I your wanted guess know suggest correctly, was is sounded some dynamics QX that within underlying other would item, I specifically. I if on I'm line, like mostly there? me out the one, to in come expected first can you quarter what And illuminate interpreting whatever Am was mid-XXs so, of guidance that pushed getting for quarter.

Matthew Clark

Yes.

gas, the Some of you natural out. it as call is

level capture to XXX% Some of And compared piece. XXXX, base, a it of performance incentive for some is that which does to that. of be happen all where just at we essentially would the we restaurant paid impact

just seasonality in quarter. is it the of some first you versus of QX see And what

have is really inflation. any leverage the levels. Those it to associated inflation. don't some sales items, And rent with of line things occupancy and compared just the like They're pricing

X% pricing move to maybe to that's we some And comparatively. area an so leverage in as getting we should be up X% X% inflationary

Brian Vaccaro

along. it I'll pass right. you. All Thank

Operator

Rutherford next Stephens from Inc. Your James comes of Instructions] question line [Operator the with

Your line is now open.

James Rutherford

lot angle, if of And to much a questions from sort there's of on I tackle for very the I different just Thanks but been this could. I trends, the want know recent question. a

the about and greater You trend simple for I you in that of is the talked what $XX last is in that you million XX% If or mentioned about, than AUV XXXX. the did $XX.X $XX that weeks math, million seasonalize that you've XXXX, few million taken which do to higher just get year. that

kind a comments of of XXXX few too the greater stretch weeks. trying low some few those percentage to I'm I here say would to reconcile levels imply in it weeks, last in just you please? much your the is So in if could last comments something that are of that double-digit running the than

Matthew Clark

Yes.

that. – also, that I our through expectation the saying AUVs is as consideration be And take capturing over is trends and we expectation seasonal $XX we're that. Factory flowing we're the includes noted, would it to versus that where be what The XXXX will we've think as into And Cheesecake we to have million. in you pricing

around as So speak now, we're year, we in pricing level. X% a this anticipating right

So trends that builds surge. whatever on were we pre-Omicron

James Rutherford

Okay. Thank you.

Operator

of comes question line Wedbush the from with next Nick Setyan Securities. Your

Your line is now open.

Nerses Setyan

Hi, XXXX thank trajectory apologize the you. for pricing. I delivering margin of this in X% in context

below XXXX. QX Is we you in said Please about above a the QX XX.X%. XXX we'd the But at at be terms wrong. say basis about starts I early to half. Prior increase if the QX that year interpretation? be below price I'm me think still of in Then level start points correct would number XXXX correct or QX in margins. at second

Matthew Clark

Matt. Hey, Nick. It's

getting that commodities, although we're offsetting pretty fully in So closer. right? quarter, second probably not I think close, that's the we're

you're above. on it roughly is that. going I then think So pretty spot it's be happens. think QX, happen, close. we slightly in we time And the and else all going equal with could be to that by get to Then If being to QX, everything

think I mean, right I your So that's that, on comments.

Nerses Setyan

QX, In the price, off Okay. take what's that falling X%... Perfect. you what's when X% incremental – that

Matthew Clark

X.X%. Falling yes. off,

Nerses Setyan

pricing QX, – And in was it. Got just menu pricing? then a what clarification

Matthew Clark

In QX. X% quarter, for it was the

Nerses Setyan

very Okay. much. Thank you

Matthew Clark

that slightly the plan and again, hit to take the want really, commodity is with think inflation stabilization is pricing, basis going sales as we on execute a our if a I pandemic percent here goal a our isn't greater into that price need made, and to to to scenario, is XXXX. Factory get double-digit trends But for. of strategy four-wall equal of just or to just point any kind scenario really single-digit to we company exit can margins on reiterate, mid-teens for of our on Cheesecake we to something Nick than than more to

Operator

attending. for questions are conference you this This at today's further no Thank time. concludes call. There

disconnect. may You now

The Cheesecake Factory Incorporated (CAKE) 17 Feb 222021 Q4 Earnings call transcript